‘SIP funding FIIs?’ Wisdom Hatch founder highlights ‘compulsive’ investment trap

Akshat Shrivastava, founder of investment education platform Wisdom Hatch, feels that Indians are caught in a ‘compulsive SIP’ while investing in the markets. 

Shrivastava also said that the foreign investors are profiting from the SIPs put in the domestic market while Indians are left with not many avenues for investing.  

In a post of X (formally Twitter), Srivastava wrote, “Your SIP money is giving exit to FIIs, who have now sold 56,000 Crore of Indian equities in first 21 days of January.” 

Explaining on the role of SIPs, he wrote, “[1] SIP money is very powerful. See, you work 9-to-5 (If you are an L&T/Infosys employee, then may be 9-to-9. But we are distracting, so let's get back..)  

[2] You get a salary at the end of the month. You expense most; with the rest, you wish to invest and build a future.  

[3] Your future is built if your SIP money growth >> inflation growth  

[4] Inflation for SIP doers= at least 10% (check medication inflation in India for example= it is 14%)  

Unless you are availing public housing, freebies etc, your inflation is at least 10%  

[5] So back to #2. You get a salary. And, are now answering the question: "Where can I get a 10%+ CAGR on my investments?" (post tax)  

[6]  FDs= will give you 5%, PF/EPF= 8-9%, Real Estate = gone out of hand already  

[7] Your only answer is EQUITIES.  

Here Indians invest in 2 broad types: Indian EQUITIES via MF vs US equities via MF  

[8] In the last 6 months: investing in US equities via MF has been made extremely difficult.” 

The founder of Wisdom Hatch is also of the view that crypto was killed in 2021-2022.

“Then, 20% TCS on foreign remittance type of lame rules came post 2023 (where you had to block 20% money on your already taxed income). Now, slowly even the option of investing abroad will be taken away,” he added. 

SIP inflows are rising because most retail people have no other choice, Shrivastava added. 

Netizens agreed to his explanation with many saying that rules are “essentially suffocating you with every possible opportunity to grow your wealth.” 

A user wrote, “It’s not just ‘compulsive’ SIPs. A significant chunk of the retail market is also driven by ‘mandatory’ contributions from NPS and EPF.” 

Anyone under the impression that Indian domestic markets have become strong must understand that Indians hardly have other choices, the user added. 

So far this month, FIls pulled out Rs 45,498 crore from Indian stock exchanges, while they invested Rs 1,101 crore in the primary market. On the other hand, DIIs purchased equities worth Rs 49,367.14 crore in January. 

Shrivastava also cautioned investors about the long-term implications of recent market trends. While expressing confidence in the market's recovery, he highlighted challenges such as faster rupee depreciation and higher inflation.